[moneydance] Envelope Budgeting/Category Balances...

[Graham Borland]

Brett Russ wrote:
> -what is the advantage of envelope over MD's budget if, by clicking on
> the budget graph on the home page, I can instantly see what categories
> are over/under budget?

The main problem with MD's budget reports is that they are transient, 
and the figures can vary wildly depending on the date range over which 
the report is generated. The basic "current month" budget report is 
especially inadequate, in that it only reports *this month's expenditure*.

It's OK for simple things like monthly grocery shopping - "Is my grocery 
spending on target this month?"  - but it breaks down when you want to 
manage long-term budgeting, i.e. irregular expenses or saving up for stuff.

Two examples of when the transient monthly budget report breaks down:

1. You are putting aside a certain amount, say £100 each month, for a 
vacation, and you've been doing this for five months. You want to know 
how much you've saved for your vacation. You look at this month's budget 
report, and it quite happily reports that you haven't spent any of your 
£100 vacation budget this month. But that's not what you want to know! 
With the Envelope model, you just look at the balance of your Vacation 
envelope, and it instantly tells you what you want to know: you have 
£500 available to spend on your Vacation. The envelope balance at any 
instant is cumulative, and reflects the history of saving and spending 
in that category.

You can work around this in MD by generating budget reports over longer 
periods of time, but I always found it to be extremely awkward. I found 
myself *never* wanting to know if my spending was on track over the last 
N months, but *always* wanting to know "how much is available to spend 
in this category"?


2. You have a monthly budget of £50 for Dining. You look at this month's 
budget report, and it tells you that you have your full £50 available 
for spending in restaurants this month. But wait! What if you actually 
*overspent* last month? You spend £80 on a special birthday meal last 
month, so technically you're "overdrawn" in your Dining category. This 
important fact is completely lost in the transient monthly budget 
report. Using Envelopes, you would see at a glance that your current 
Dining fund is at £20 (this month's £50, minus the £30 overspend from 
last month) so you know you can't eat out as often this month.

Again, you can work around this by generating budget reports over longer 
periods, but it's fiddly and it makes any short-term budget report useless.

I find it far, far simpler to just look at the balance of my Envelope 
categories to see how much I have left in each envelope. I don't have to 
mess around with setting up budget reports over the appropriate time 
periods, memorizing the reports and updating the start/end date for each 
new month, etc.

-- 
Graham Borland
graham at moonbog.net